Canadian Economy: Lack of Diversification as the Major Economic Problem

Running head: CANADIAN ECONOMY 1
Canadian Economy
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Name of the University
Author Note

CANADIAN ECONOMY 2
Thesis statement
The most important economic problem facing Canada today is lack of diversification.
Introduction
Canada is considered among the leading trading nations across the world. United States
of American is the leading partner of Canada with eighty percent of its exports to Canada and
sixty five percent imports. Despite the economic growth of Canada, it faces a number of
problems that affect its GDP. In this case, the most important economic problem facing Canada
today is "lack of diversification." This is the most economic problem that Canada is facing
because it has affected the prosperity of the country for many years. The latest economic
statistics of Canada indicate that the country lacks a market diversification. At least 70% of
Canada's "TSX Composite Index" is comprised of only 3 sector that are- financial, energy, and
materials. Whereas there are limited telecommunication businesses and utilities to select from
countrywide. Therefore, the telecommunication sectors, retailers and consumers are always not
included in the composite. In most cases, many companies in Canada fear to enter into new
international markets because the lack of management capacity as they are supposed to run a
tight market (Quarter, J., Mook, L. and Armstrong, 2009).
In this case, the Canadian economists illustrate the economic diversification is not a
simple process because it is rocky and slow hence creating up a slow development. In most
cases, economic diversification is always difficult if the state does not have a sense of urgency.
However, the longer the process is delayed to be implemented, the more the change becomes
difficult (Burstein and Alexander, 2009). If Canada had effectively deployed strategies aimed at
deepening its investments and trade relationships with the growing emerging international

CANADIAN ECONOMY 3
markets, its risks of property would be reduced (Baldwin, J., Gu.W., and Yan, 2011). Canada
should not concentrate on only the USA market but rather focus on the emerging markets such as
India, China and many others.
In order to create economic diversification, Canada should be in the position to
implement policies aimed at helping different firms in the state to gain access to the markets
created. This may involve improving the level of productivity and innovation capacity of
companies. Even if "lack of diversification" is the major economic problem to the prosperity of
Canada, its government does not understand it. Therefore, "lack of diversification” of Canada's
economy has affected it for the past years and if not sorted out immediately it will continue
affecting the country (Baldwin and Gu, 2009).
According to my point of view, Canada's economy is getting worse. The country is
expected to enter into Recession this year. The country's poor economic performance is as a
result of various factors that are expected to drive the economy into recession or economic
decline. In this case, the three major factors that may lead to the decline of Canada's economy
include the following; first, rising gas and oil prices, even if the price of oil is $60s, the prices of
price are also expected to rise due to the excelling economy of US. Oil is expected to only move
to a single direction, up. Second, interest rates; in this case, interest rates in the Canadian
economy are moving up slowly by slowly (Shaker, 2009). This will create a greater impact on
the spending of consumers depending on the indention of the Canadians. Third, reduced home
sales of about thirty percent in major markets. As a result of the larger real estate size in the
country's Gross Domestic Product, it creates a great concern to the economy. Therefore, as the
Canadian consumers are getting limited by the three items above, retail sales are expected to